Bitcoin has proven to be an incredible investment. In July, BTC prices surged past $10,000, but to understand its rise, you need to zoom out further.
At the start of 2014, one Bitcoin was worth roughly $750. If you’d bought then, you would have earned 13 times your original investment.
Following the latest surge, there’s still a strong long-term case for holding Bitcoin.
“This is a fantastic fundamental hedge and store of value against autocratic regimes and banking infrastructure that we know is corrosive to how the world needs to work properly,” said Chamath Palihapitiya, CEO of Social Capital. “You cannot have central banks infinitely printing currency.”
But Bitcoin isn’t the only way to rapidly grow your money. One tech stock in particularly has been minting millionaires for more than a decade. Since 2006, shares are up by 8,354%!
This party isn’t over. More gains are just around the corner.
This stock is soaring
Constellation Software (TSX:CSU) has it all figured out. Started by venture capitalist Mark Leonard, the company has been one of the best investments on the planet in just 14 years. What’s the secret?
As its name suggests, Constellation is a software business. But you’ve never heard of any of its products. That’s because it doesn’t sell products to people like you or me. Instead, it’s focused on enterprise applications, often for niche industries.
Just take a look at Constellation’s website. It literally has hundreds of products, none of which are popular. But that’s not a problem. Constellation isn’t looking for the next big thing, it just wants to be profitable.
By focusing on niche software, Constellation reduces competition dramatically. Sometimes, there are zero competing products. This gives it fantastic pricing power over customers, who can’t switch to an alternative, because there isn’t one.
The other advantage of niche products is that there’s a nearly infinite runway for growth. There may only be a handful of large operating systems or word processors, but there are hundreds of thousands of niche enterprise solutions, with more popping up every day. All Constellation needs to do is repeat its rewarding strategy again and again.
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Better than Bitcoin?
Constellation’s dramatic growth proves that you can secure incredible investments in the traditional stock market. Bitcoin is now a reasonable holding for nearly any investor, but you should still diversify with conventional instruments.
The most important thing is to keep a long-term time horizon. Constellation delivered the biggest gains for those that have held on for a decade or more. The same applies for Bitcoin. Both vehicles are targeting opportunities that should persist for another few decades. In some scenarios, the tailwinds will increase.
So, the answer isn’t to choose between high-growth tech stocks or cryptocurrencies like Bitcoin. If you believe in the long-term potential, buy both.
Now armed with a $34 billion market cap, perhaps Constellation’s best days are behind it. But there are plenty of younger tech stocks ready to match its incredible rise. Just make sure to only buy companies you want to own for many years to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
The Motley Fool owns shares of and recommends Constellation Software. Fool contributor Ryan Vanzo has no position in any stocks mentioned.